A RETIREMENT JOURNEY Meet Lydia

Transcription

1 A RETIREMENT JOURNEY Meet Lydia A hypothetical illustration

2 This is Lydia s story. Born and raised in New York, Lydia grew up around the bright lights of Broadway and, as a result, has always been a dreamer. She especially enjoyed theater and ballet, which led her to a successful career working with talent in the industry. In 1999, at age 60, she decided to retire and move to Atlanta, Georgia to enjoy a slower (and cheaper) Southern style of life during retirement. In 1999, Lydia had a $500,000 IRA Rollover that she wanted to invest to help pay for discretionary expenses. After hearing about a friend s success in investing in high-tech, she asked her financial advisor about investment options in that sector. Instead, her advisor recommended a different approach to support her long-term needs the Franklin Templeton Lifestyle-Ready Strategy, which has a relatively higher level of risk in seeking to support potentially rising discretionary income needs. The strategy is comprised of a 30% allocation each to the Franklin Rising Dividends Fund, Franklin Mutual Global Discovery Fund and Franklin Total Return Fund and a 10% allocation to the Templeton Global Bond Fund.* From , Lydia withdrew every year to cover her discretionary expenses. She also made several additional withdrawals both to travel and to support the legacy she wanted to leave behind. Investor s Profile (Hypothetical) Lydia 77 Years Old Single Atlanta, Georgia LIFESTYLE-READY STRATEGY $500,000 Total Amount Invested in 1999 Let s take a look at Lydia s journey. All investments involve risks, including possible loss of principal. *Franklin Rising Dividends Fund seeks long-term capital appreciation by investing at least 80% of its net assets in companies of any size that have paid consistently rising dividends. Franklin Mutual Global Discovery Fund seeks capital appreciation. Its strategy is focused on undervalued mid and large-cap equity securities, with a significant portion of its assets in foreign securities and, to a lesser extent, distressed securities and merger arbitrage. Franklin Total Return Fund seeks to provide high, current income consistent with preservation of capital. Capital appreciation over the long-term is a secondary goal. The fund invests at least 80% of its assets in investment grade debt securities and investments and focuses on government and corporate debt securities and mortgage- and asset-backed securities. 1 Templeton Global Bond Fund seeks current income, with capital appreciation and growth of income, by investing at least 80% of its net assets in bonds of governments, government-related entities and government agencies located around the world. The fund regularly enters into various currency-related and other transactions involving derivative instruments.

3 Where is Lydia now? 18 years later Open flap to see answers.

4 Lydia s journey A hypothetical illustration Lydia invests her $500,000 IRA Rollover on January 1, 1999 in the Lifestyle Ready Strategy CURTAIN CALL Like a true New Yorker, Lydia s career ends with an extravagant retirement party. She moves her entire life to Georgia. Exit Stage Right. YEARLY DISCRETIONARY EXPENSES Lydia s yearly discretionary expenses enhance the quality of her retirement and include things like her country club membership, yoga classes, theater shows and dining out. Not FDIC Insured May Lose Value No Bank Guarantee BON VOYAGE Lydia finds all the France travel articles she s saved over the years and takes a trip to experience them firsthand. $15,000 A HEART OF GOLD Now that she has the time and money to devote to her favorite causes, Lydia makes a donation to an animal rights charity. DINE AROUND TOWN With her new friends, Lydia starts the monthly Atlanta Ladies Foodie Club gathering, where they take turns hosting dinners and cooking food from various cultures % Annual Total Returns Lifestyle-Ready Strategy (/Class Z) Average Annual Total Returns (Periods Ended September 30, 2017) 5 Lifestyle-Ready Strategy Franklin Rising Dividends Fund Franklin Mutual Global Discovery Fund Franklin Total Return Fund Templeton Global Bond Fund Inception Date 1/14/87 12/31/92 8/3/98 9/18/86 CLASS A CLASS A (FRDPX) 9 CLASS A (TEDIX) 10 CLASS A (FKBAX) CLASS A (TPINX) 13 With Sales s s (FRDAX) 8 With Max 5.75% Initial Sales Class Z (MDISX) With Max 5.75% Initial Sales (FBDAX) With Max 4.25% Initial Sales (TGBAX) 12 With Max 4.25% Initial Sales 1-Year 10.39% 4.70% 9.61% 14.65% 7.79% 14.36% 15.53% 8.59% 15.23% 1.04% -3.50% 0.75% 13.17% 7.99% 12.83% 3-Year 5.47% 3.63% 4.28% 10.00% 7.58% 9.72% 6.19% 3.83% 5.90% 2.08% 0.38% 1.85% 1.70% -0.02% 1.44% 5-Year 7.57% 6.44% 6.92% 12.62% 11.02% 12.34% 9.96% 8.36% 9.65% 2.30% 1.16% 2.04% 2.97% 1.84% 2.72% 10-Year 5.76% 5.20% 4.89% 7.27% 6.36% 7.00% 5.51% 4.59% 5.21% 4.56% 3.86% 4.31% 6.31% 5.58% 6.04% Since Inception 9.47% 9.16% 9.37% 11.69% 11.05% 11.32% 5.24% 4.74% 4.98% 7.67% 7.32% 7.47% Expense Ratio 0.66% 0.91% 0.99% 1.24% 30-Day Standardized Yield 6 As of 9/30/17 N/A N/A % 0.63% 2.24% 2.26% % 1.90% 0.91% % 0.68% 4.70% 4.77% Beta 7 As of 9/30/ % % 4.26% GREAT AUNT LYDIA When Lydia's favorite niece gives birth to a precious baby boy, Lydia decides to open a 529 College Savings plan for him. HEALTHY COMPETITION Lydia enjoys letting her competitive side out playing in this year s women s doubles tennis championship at her country club % 4.33% Performance data represents past performance, which does not guarantee future results. Current performance may differ from figures shown. The funds investment returns and principal values will change with market conditions, and you may have a gain or a loss when you sell your shares. Please call Franklin Templeton Investments at (800) DIAL BEN/ or visit franklintempleton.com for each fund s most recent month-end performance. /Class Z shares are only offered to certain eligible investors as stated in the prospectus. They are offered without sales charges or Rule 12b-1 fees. The fund offers multiple share classes, which are subject to different fees and expenses that will affect their performance. Please see the prospectus for details. NAMASTE After a year of physical therapy and recovery from her hiking injury, Lydia s doctor finally clears her to resume her yoga practice. MACHU PICCHU OUCHIE While travelling in Peru, Lydia hikes up for a sunset view of Machu Picchu. Trying to hike down in the dark results in a hospital stay $10, Although U.S. government sponsored entities may be chartered or sponsored by Acts of Congress, their securities are neither issued nor guaranteed by the U.S. government. Please see the fund s prospectus for a detailed discussion regarding various levels of credit support for government agency or instrumentality securities. The fund s yield and share price are not guaranteed and will vary with market conditions. Securities owned by the fund, but not shares of the fund, are guaranteed by the U.S. government, its agencies or instrumentalities as to timely payment of principal and interest. 2. Hypothetical Lifestyle Ready Strategy ending portfolio value for the period 1/1/99 12/31/16 assumes a $500,000 initial investment on 1/1/99 with the following allocations: 30% Franklin Rising Dividends Fund, 30% Franklin Mutual Global Discovery Fund, 30% Franklin Total Return Fund and 10% Templeton Global Bond Fund. Also assume Class Z for all funds, withdrawals made at the end of each applicable year, include the reinvestment of all dividends and capital gains at net asset value, and assume rebalancing to an equal allocation of each of the three funds on an annual basis. FOR THE PEOPLE The next cause Lydia chooses to make a donation towards is human rights. ON POINT Because she was so passionate about dancing both personally and professionally, Lydia donates scholarship money to a ballet school in New York $50, Global Technology Index performance includes hypothetical withdrawals for comparison purposes. Source: 2017 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. Indexes are unmanaged and one cannot invest directly in an index. They do not reflect any fees, expenses or sales charges. 4. Annual total returns reflect the Lifestyle Ready Strategy s return for each year and do not take into account the withdrawals shown in this hypothetical illustration. 5. These funds offer other share classes, subject to different fees and expenses that will affect their performance. 6. The fund s 30 Day Standardized Yield is calculated over a trailing 30 day period using the yield to maturity on bonds and/or the dividends accrued on stocks. It may not equal the fund s actual income distribution rate, which reflects the fund s past dividends paid to shareholders. IMPORTANT LEGAL INFORMATION The figures shown represent performance of a hypothetical investment and withdrawals to illustrate how this strategy may fit as part of a well-diversified retirement income investment portfolio. The hypothetical illustration is provided for general educational purposes only and does not constitute investment, legal or tax advice. You should consider your goals, risk tolerance and time horizon when selecting investments or making asset allocation decisions for your portfolio. It s important to note that the amounts withdrawn do not represent dividends or income, but, rather, the proceeds from the sale of shares. This illustration assumes sufficient shares are sold from the shareholder s account at the time of each withdrawal to provide for the withdrawal amount. Please note that this hypothetical investment does not take into account federal, state or municipal taxes. If taxes were taken into account, the hypothetical values shown would have been lower. The results of the withdrawals could vary substantially depending on investment performance of the funds during the period. The amount chosen for withdrawal impacts the value remaining at the end of the period. In a period of declining market values, continued withdrawals could eventually exhaust the principal. If withdrawals were made at other times and/or in different amounts, the results will be different. Investing in a Franklin Templeton fund does not guarantee one s retirement income needs would be met. This communication is general in nature and provided for educational and informational purposes only. It should not be considered or relied upon as legal, tax or investment advice or an investment recommendation, or as a substitute for legal or tax counsel. Any investment products or services named herein are for illustrative purposes only, and should not be considered an offer to buy or sell, or an investment recommendation for, any specific security, strategy or investment product or service. Always consult a qualified professional or your own independent financial advisor for personalized advice or investment recommendations tailored to your specific goals, individual situation, and risk tolerance. Franklin Templeton does not provide legal or tax advice. Federal and state laws and regulations are complex and subject to change, which can materially impact your results. Franklin Templeton Distributors, Inc. (FTDI) cannot guarantee that such information is accurate, complete or timely; and disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information WHAT S NEXT? Although she is slowing down a bit, Lydia still wants to check one last travel destination off of her bucket list. As she reflects on her past acts of charitable giving, she talks with her financial advisor about the future legacy she plans to leave TOTAL WITHDRAWALS $615,000 ENDING PORTFOLIO VALUE 2 $713,154 After covering her discretionary expenses and all of the additional withdrawals Lydia made for 18 years, the ending value of her investment in the Lifestyle-Ready Strategy is more than her original investment! What about High Tech? If Lydia hadn t taken the recommendation from her financial advisor and had invested in the high tech sector instead, she would have run out of money in December $0 DOW JONES GLOBAL TECHNOLOGY INDEX 3* *It s important to note that fund shares are subject to loss. The Dow Jones Global Technology Index is considered representative of the global technology sector and returns do not reflect the deduction of fees or sales charges. Indexes are unmanaged and one cannot invest directly in an index. Meet Lydia: A Retirement Journey franklintempleton.com franklintempleton.com Meet Lydia: A Retirement Journey

5 What will your journey look like? For more information about the Lifestyle-Ready Strategy and to discuss what s next for you, please contact your financial advisor. Franklin Templeton Distributors, Inc. One Franklin Parkway San Mateo, CA (800) DIAL BEN / franklintempleton.com 7. Beta is a measure of a fund s volatility relative to the market, as represented by the following benchmarks: Franklin Rising Dividends Fund: S&P 500 Index; Franklin Mutual Global Discovery Fund: MSCI World Index; Franklin Total Return Fund: Bloomberg Barclays U.S. Aggregate Index; Templeton Global Bond Fund: Citigroup World Government Bond Index. A beta greater than 1.00 indicates volatility greater than the market. Based on the 3-year period ended as of the date of the calculation. 8. Effective 10/3/05, the fund began offering Shares. For periods prior to the fund s inception date, a restated figure is used based on the fund s oldest share class, Class A performance, excluding the effect of Class A s maximum initial sales charge but reflecting the effect of the Class A Rule 12b 1 fees; and for periods after the fund s inception date, actual performance is used, reflecting all charges and fees applicable to that class. 9. Prior to 8/3/98, fund shares were offered at a lower initial sales charge; thus, actual returns may have differed. 10. Prior to 11/1/96, the fund offered only a single class of shares without a sales charge and Rule 12b 1 expenses, Class Z shares. Figures reflect a restatement of the original share class to include both the Rule 12b 1 fees and maximum initial sales charges (when quoting figures with sales charges) applicable to each share class as though in effect from the fund s inception. For periods after 11/1/96, actual performance is used, reflecting all charges and fees applicable to that class. 11. The fund has an expense reduction and a fee waiver associated with any investments it makes in a Franklin Templeton money fund and/or other Franklin Templeton fund, contractually guaranteed through February 28, Fund investment results reflect the expense reduction and fee waiver; without these reductions, the results would have been lower. 12. Effective 1/1/97, the fund began offering Shares. For periods prior to the fund s inception date, a restated figure is used based on the fund s oldest share class, Class A performance, excluding the effect of Class A s maximum initial sales charge but reflecting the effect of the Class A Rule 12b 1 fees; and for periods after the fund s inception date, actual performance is used, reflecting all charges and fees applicable to that class. 13. On 1/1/93, a plan of distribution was implemented for these shares under Rule 12b 1, which affects subsequent performance. 14. The fund has an expense reduction and a fee waiver associated with any investments it makes in a Franklin Templeton money fund and/or other Franklin Templeton fund, contractually guaranteed through April 30, Fund investment results reflect the expense reduction and fee waiver; without these reductions, the results would have been lower. WHAT ARE THE RISKS? All investments involve risks, including possible loss of principal. Franklin Rising Dividends Fund Value securities may not increase in price as anticipated or may decline further in value. For stocks paying dividends, dividends are not guaranteed, and can increase, decrease or be totally eliminated without notice. While smaller and midsize companies may offer substantial opportunities for capital growth, they also involve heightened risks and should be considered speculative. Historically, smaller- and midsize-company securities have been more volatile in price than larger company securities, especially over the short term. These and other risks are detailed in the fund s prospectus. Franklin Mutual Global Discovery Fund Value securities may not increase in price as anticipated or may decline further in value. Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments. Because the Fund may invest its assets in companies in a specific region, including Europe, it is subject to greater risks of adverse developments in that region and/or the surrounding regions than a fund that is more broadly diversified geographically. Current political and financial uncertainty surrounding the European Union may increase market volatility and the economic risk of investing in companies in Europe. Smaller-company stocks have exhibited greater price volatility than larger-company stocks, particularly over the short term. The fund s investments in companies engaged in mergers, reorganizations or liquidations also involve special risks as pending deals may not be completed on time or on favorable terms. The fund may invest in lower-rated bonds, which entail higher credit risk. Please consult the prospectus for a more detailed description of the fund s risks. Franklin Total Return Fund Interest rate movements and mortgage prepayments will affect the fund s share price and yield. Bond prices generally move in the opposite direction of interest rates. Thus, as the prices of bonds in the fund adjust to a rise in interest rates, the fund s share price may decline. Changes in the financial strength of a bond issuer or in a bond s credit rating may affect its value. The risks associated with higher-yielding, lower-rated securities include higher risk of default and loss of principal. Investment in foreign securities also involves special risks, including currency fluctuations, and political and economic uncertainty. Derivatives, including currency management strategies, involve costs and can create economic leverage in the portfolio which may result in significant volatility and cause the fund to participate in losses (as well as gains) on an amount that exceeds the fund s initial investment. The fund may not achieve the anticipated benefits, and may realize losses when a counterparty fails to perform as promised. These and other risk considerations are discussed in the fund s prospectus. Templeton Global Bond Fund Derivatives, including currency management strategies, involve costs and can create economic leverage in the portfolio which may result in significant volatility and cause the fund to participate in losses on an amount that exceeds the fund s initial investment. The fund may not achieve the anticipated benefits, and may realize losses when a counterparty fails to perform as promised. The markets for particular securities or types of securities are or may become relatively illiquid. Reduced liquidity will have an adverse impact on the security s value and on the fund s ability to sell such securities when necessary to meet the fund s liquidity needs or in response to a specific market event. Foreign securities involve special risks, including currency fluctuations (which may be significant over the short term) and economic and political uncertainties; investments in emerging markets involve heightened risks related to the same factors. Sovereign debt securities are subject to various risks in addition to those relating to debt securities and foreign securities generally, including, but not limited to, the risk that a government entity may be unwilling or unable to pay interest and repay principal on its sovereign debt, or otherwise meet its obligations when due. Investments in lower-rated bonds include higher risk of default and loss of principal. Bond prices generally move in the opposite direction of interest rates. As the prices of bonds in the fund adjust to a rise in interest rates, the fund s share price may decline. Changes in the financial strength of a bond issuer or in a bond s credit rating may affect its value. These and other risk considerations are discussed in the fund s prospectus. This flyer must be preceded or accompanied by a current Franklin Rising Dividends Fund, Franklin Mutual Global Discovery Fund, Franklin Total Return Fund and Templeton Global Bond Fund summary prospectus and/ or prospectuses. Please carefully read a prospectus before you invest or send money. Investors should carefully consider a mutual fund s and/or 529 college savings plan s investment goals, risks, charges and expenses before investing. To obtain a mutual fund summary prospectus and/or prospectus or the 529 plan Investor Handbook, which contains this and other information, talk to your financial advisor, or call Franklin Templeton Distributors, Inc., the principal distributor of Franklin Templeton s U.S. registered mutual funds and the manager and underwriter for the 529 plan, at (800) DIAL BEN/ or visit franklintempleton.com. Please carefully read a mutual fund prospectus and/or 529 plan Investor Handbook before you invest or send money. With respect to investments in the 529 plan, consider whether your, or the beneficiary s, home state offers any state tax or other benefits that are only available for investments in its qualified tuition program Franklin Templeton Investments. All rights reserved. RTSI BML 10/17